Guest Post: The Hidden Gold on the Frontlines

Mark's note: Today's guest post comes to us from Ireland and a lean consultant and author named Andy Brophy. He has a new book called Innovative Lean, for which he interviewed me and some client team members from Children's Medical Center Dallas to talk about some kaizen mechanisms we put in place there, one of many case studies in the book. Hope you enjoy the post…

So many employees aren't accustomed to being even asked for their ideas. The average American worker submits one formal written idea every 8 years and of these less than 1/3 are implemented! Employees see problems and opportunities every day in their immediate work areas that their managers do not. When employees are not given the opportunity to be heard and the time to implement their ideas, they lose faith in management and are thus not fully engaged in their work.

The foundation of a good idea system is based on the realization that there is far more capability/capacity in our people than is actually being harnessed. The essence of the Lean philosophy is developing within each employee an improvement-seeking and waste-elimination mindset. If everyone even improved their job 0.1% everyday, that adds up to a 25% improvement per employee year on year. That equates to a colossal competitive advantage over time and competitors cannot copy these compounded small improvements.

Why do Employees Step Forward with Ideas?

Trust that they will be listened to and acted upon

They want to eliminate impractical things that they have to do

To make their jobs easier and more interesting

There is nothing more annoying than watching money been wasted

They want to be listened to, feel valued by being involved in decision making, and be recognised for their contributions

Idea Management is not Simply More Cost Cutting Measures

Gathering and harvesting employee ideas is not just about cost cutting. All service and manufacturing organisations incur two types of cost:

Costs that deliver value to the customer. These costs are good and are to be welcomed and even increased if they help differentiate the organisations offerings.

Costs that are incurred, but don't end up delivering value to customers, are waste. Idea Management should be focused on dissolving these wastes thereby improving the performance of the workplace.

Many cost-cutting exercises don't distinguish between these two forms of cost, or worse still attack the first cost type exclusively, which is why many cost cutting efforts end up causing more destruction than good over the longer term.

Operational waste can take many forms, including waiting, excess walking, unnecessary services, rework and defects, energy, excess inventory, etc. There is no end to improvement opportunities if we become sensitized to waste, as this thought provoking quote from Shigeo Shingo reveals: “If the nut has 15 threads on it, it cannot be tightened unless it is turned 15 times. In reality, though, it is that last turn that tightens the bolt and the first one that loosens it. The remaining 14 turns are waste.”

Idea management's purpose is to deliver continuous incremental innovation, employee involvement and up-skilling to the workplace. Employees are coached to put forward ideas that make their job easier, can be implemented quickly, eliminate the cause of problems, save money, and don't cost much to implement.

We commonly hear: “That's already happening here, we just don't write the ideas down.” However, is there anything else important like; for example, an expense system, that you don't have a process for? Ideas are too important to be left to chance and in the absence of a defined process they will be pushed to the back burner.

Traditional methods such as suggestion boxes don't work. Employees feel they would be better off dropping their ideas into a paper shredder if they never hear about previously submitted ideas. Suggestion systems also get stuck in their own bureaucracy. There are long implementation times, low participation rates (typically less than 5 per cent of the workforce) and high rejection rates. Most traditional suggestion systems fall prey to ideas for other people to do something about, rather than the originator of the idea. If all you have to do is suggest an idea for someone else to implement, you can say whatever you like.

One way to improve it is to use the Kaizen approach to idea management where emphasis is placed on total workforce participation and idea activity is an expected part of the job. There are high participation levels, typically more than 50 per cent of the workforce.

This is because roles and responsibilities for the idea system are outlined at all levels. Ideas are visually displayed on boards, implemented fast, and recognized. New skills are learned by employees through interacting with support functions when implementing their ideas. People are coached to recognize “hidden” waste and the idea system is integrated into daily problem solving. Idea activity is also measured. The employee's direct manager mentors and supports the idea originator during implementation. Small ideas don't take enormous time and resources to implement and are not a burden on management, the opposite in fact.

There are also very high approval rates for ideas put forward. Employees are coached as to what constitutes a good idea. “Bad ideas” are viewed as training opportunities; the intent behind the idea is teased out and put forward again. Peer accountability is expressed through employees posting their ideas in the work area. Ideas are often tested and implemented prior to putting forward into the idea system.

Well run idea management systems are realizing substantial returns. Subaru's employees save more than $5000 per employee, while American Airlines saves on average $55 million a year. Ideas Systems have tremendous potential in hospitals in terms of tapping into the situational knowledge of the front line employees and helping to create a culture where problems are reported and solved versus being worked around. In 2009 the Idea System at The Baptist Healthcare Hospital in Florida realised over $25 million in cost improvements.

Surprisingly, the best performing idea systems don't pay a percentage of savings for ideas. With monetary rewards, there are winners and losers, so to overcome this you should make ideas and creativity part of the job.

The key is to tap into people's intrinsic motivation, the natural desire that they have to make a positive difference. The greatest reward for employees is to see their ideas used. An example of recognition is a variety of token items and monthly raffles for implemented ideas. Use these recognition methods tailored to enhance each individual's motivation to participate. As long as the intended recognition has meaning to people it can cause them to do extraordinary things. Think what people will go through to win coveted sporting medals.

With monetary rewards there are winners and losers. Paying for ideas also adds layers of bureaucracy, rules out the sharing of ideas (as already paid for), prohibits teamwork and can encourage fraud for example by sabotaging equipment so as to submit improvement ideas for payment.

Extrinsic rewards such as cash also fade fast and become expected. Cash has low lasting impact value, indeed research studies have concluded that non cash recognition delivers a 6:1 ROI over direct cash awards. Intrinsic motivation is the natural desire that people have to do a good job and make a positive difference. It is the buzz a person gets from making an improvement in their workplace.

An example idea process flow is as follows.

Employees write down ideas every time they find a problem or see an opportunity for improvement and post them on the local idea board. Whenever possible, an example of the before and after situation is captured.

The person with the idea evaluates and filters the idea with peers (this saves supervisor evaluation time and improves idea quality). Their supervisor then responds within 24 hours of the idea having been brought forward.

Consider the ripple effect for all ideas and the impact they might have if shared elsewhere.

The person who comes up with the original idea should implement the idea themselves or with their work team. If additional help is needed from maintenance, IT etc, the person who put forward the idea oversees the completion of this.

Then, record implemented ideas in an idea log electronically.

Monthly metrics track that the goal of two ideas per month/person is reached and display the results. Metrics for success include: number of ideas per employee/team, volume of implemented ideas, participation rate and implementation time.

If the cycle above flows smoothly, the improvement activity will also flow; one idea will lead to another and continuous improvement will translate into improved performance and higher employee engagement.

The recently published book Innovative Lean: A Guide to Releasing the Untapped Gold in Your Organisation, to Engage Employees, Drive Our Waste and Create Prosperity by Andy Brophy & John Bicheno develops the process and roadmap to establishing an Idea Management System. It is available from Amazon.com and Barnes & Noble.

Totally agree with the importance of this. However, in many if not most service organizations, the change in process will not be within the discretion of the person’s supervisor or even second-level supervisor…very often, the involvement of the I/T organization will be required. And I/T organizations are often rigid and bureaucratic to the point that they act like a dragging brake shoe on the entire enterprise.